News

Itac Chicken Dumping Probe Nears Conclusions

07 February 2014

SOUTH AFRICA - An investigation into alleged dumping of frozen bone-in chicken portions from Germany, the Netherlands and UK into South Africa is moving towards a final finding.

BusinessDay reports that the International Trade Administration Commission (Itac) said on Tuesday (4 February) that consideration of the request by the South African Poultry Association for an "anti-dumping duty" of 91 per cent on imports from Germany and the Netherlands, and a similar duty of 58 per cent on British imports, was still under way.

This is despite a request from the Association of Meat Importers and Exporters (Amie) last December for the investigation to be terminated. The push by the poultry association for anti-dumping duties on the three European Union (EU) countries comes after last year’s increase in import tariffs on five categories of imported chicken products, aimed mainly at imports from Brazil.

Following this tariff increase, importers to South Africa and exporters from Brazil and Argentina had predicted a shift to EU chicken products as South Africa does not impose import duties on EU members, because of a trade and co-operation agreement signed in 2001.

But South Africa may impose anti-dumping duties where there is a prima facie case that local industry is suffering material injury from dumping by EU members.

Late last year Amie had claimed in a 17-page letter to Itac that the poultry association’s application contained inaccuracies. Amie representative Donald MacKay, a director of International Trade Advisors, said in the letter that the poultry association submitted 14 prices in respect of the UK, but 65 per cent of the prices related to fresh product, which was not part of the investigation and was classified differently, as frozen products.

The letter also seems to claim that German and Dutch products were also subject to attempts at inaccurate classification.

Members of the poultry association account for 72 per cent of frozen bone-in chicken portions produced in the Southern African Customs Union. The association’s application was supported by Grain SA, the Animal Feed Manufacturers Association, Swazi Poultry Processors, Namib Poultry Industries, the Botswana Poultry Association and the Basotho Poultry Farmers Association.

Mr MacKay said the inclusion of fresh product prices showed that the poultry association had deliberately submitted misleading information in order to derive the benefit of having an inquiry.

However, Itac said that the poultry association had submitted "sufficient evidence and established a prima facie case" to enable the commission to arrive at a reasonable conclusion that an investigation should be initiated on the basis of dumping, material injury, threat of material injury and causality.

Among those making submissions to the commission are producers Afgri, County Fair, Early Bird (Olifantsfontein), Early Bird (Standerton), Rainbow Chicken, Sovereign Foods and Supreme Poultry. They have claimed that producers’ return on investment has declined, and that they have experienced negative net cash flows, along with negative effects on capacity utilisation, a decline in profits, an increase in inventory and a decrease in productivity.

However, Amie also said in its letter the poultry association had "failed abysmally" to deal with factors that contributed to the industry’s decline by not disclosing the effect of brining, changes to expiry dates, an incorrect business model and labour unrest.

"No material injury has been established, as injury can only be determined in respect of four of the 19 injury factors, which raises serious questions as to whether industry is experiencing any material injury."

In a research note published at the time of the association’s application, trade, competition and applied economics firm Econex described the imposition of higher import tariffs as "protectionist policies". It said the costs to consumers were large and fell disproportionately on the poor.

The company’s research showed that the poorest 10 per cent of South Africans spend 15 per cent of their household income on chicken.